Australia’s Nine Entertainment has reported full-year profit of A$324.8 million, and has reached an agreement to end its output agreement with Warner Bros.
Nine said it had managed to cut costs by A$62 million this year, despite an increase in sports rights costs, legal fees related to litigation with rival Seven Network and affiliate WIN, and the launch of new channels 9HD and 9Life. It also revealed an agreement to end its costly output deal with US studio Warner.
The broadcaster said it has in princple “reached an agreement with Warner Bros. in relation to the life of series obligations”, adding: “This agreement results in Nine exiting these obligations and provides increased flexibility in relation to future content spend.”
Nine has taken a A$45.7 million charge on its deal for US dramas from Warner Bros., and still will need to pay a further A$86 million in 2018 and 2019.
Nine expects the agreement to finalise in the next few weeks.
The company, which owns commercial channel Nine Network, revealed its full-year results to June 30 included net profit of A$120.3 million and revenues of A$1.3 billion, which were down year-on-year and due to “challenging market conditions in free to air television and refocused digital business”.
Television earnings were down 11%, though digital profits grew 20%.
Nine CEO Hugh Marks, who is in charge for Nine Entertainment’s first set of full financials after replacing David Gyngell, said: “The ratings and revenue performance of our core free-to-air business was disappointing in the first six months of calendar 2016, due to a combination of the challenging ad market and poor programming outcomes.
“However, we are taking positive steps to regain momentum in our ratings and revenue, with a well advanced content plan for 2017 incorporating 50% premium local television content,” he said.
Nine said it will continue to invest in SVOD platform Stan, which it runs jointly with Fairfax Media.